In This Article:
(Adds Mexican peso reaction to exit polls and dollar/yen at new high, updates levels throughout)
* Euro whipsawed by German coalition crisis as CSU head quits
* Dollar hits fresh 6-week high, supported by Fed policy outlook
* Mexican peso gains as exit polls show AMLO on track to win
* Yuan little changed after weekend China factory data
By Hideyuki Sano and Tomo Uetake
TOKYO, July 2 (Reuters) - The euro slipped back in early Monday trade after German Chancellor Angela Merkel was dealt a fresh blow when her interior minister offered to quit in an escalating row over migration policy.
Interior Minister Horst Seehofer, who has called for tougher border controls, said he was ready to step down as minister and as chair of his Christian Social Union (CSU), junior coalition partner in Merkel's government.
While the euro initially rose to as high as $1.1698 in a knee-jerk reaction to the news, it quickly lost steam as Seehofer's departure would be seen as making Merkel's future even more uncertain.
The common currency last stood traded at $1.1657, down 0.28 percent from late U.S. trade on Friday. Against the safe-haven Swiss franc, it fell 0.1 percent to 1.1560 franc .
The euro had gained on Friday after European Union leaders hammered out an agreement on migration that investors hoped would eased pressure on Merkel.
The dollar extended its gains against the yen to hit a fresh six-week high of 111.04 yen.
The Japanese currency was unmoved by the Bank of Japan's tankan business sentiment survey, which showed a slight dip in big Japanese manufacturers' sentiment.
The dollar has been supported by the relative strength of the U.S. economy and the prospects of further rate hikes from the Federal Reserve.
Data on Friday showed so-called core personal consumption expenditures (PCE) price index, the Fed's preferred gauge of U.S. inflation, rose 2.0 percent from a year earlier, the biggest gain since April 2012.
That kept alive expectations that the Fed will raise rates at least once and possibly twice by the end of year.
Yet investors are also becoming wary of possible disruptions from the trade disputes triggered by U.S. President Donald Trump's protectionist "America First" policy.
Canada struck back on Friday at the Trump administration over U.S. steel and aluminium tariffs, imposing punitive measures on C$16.6 billion ($12.63 billion) worth of American goods, effective from Sunday.
The United States has also threatened to impose duties on up to $450 billion of Chinese imports, with the first $34 billion portion set to go into effect on July 6.